Eid Eid, OE/ONE Corporation

Internet appliances are the next wave of computers to be bought by the public. Mr. Eid tells us how his company is serving this market.

I talked to Mr. Eid Eid back in December
of 1997 when he was President of Corel Computer Corporation. Today,
he is the head of his own start-up company, OE/ONE (soon to have a
name change), dealing with the information appliance market. I
talked to him on February 2 to learn how the new company is doing
and his take on the future.

Margie: Last time we talked,
you were president of Corel Computer. When and why did you
leave?

Eid: Well, there were many events
that influenced this. When Corel began the computer division, we
steered toward a Linux strategy. We had evaluated many real-time
and regular operating systems, and selected Linux early in the
process as the right OS for our computers. Eventually, as time
passed, we saw Java was not going to deliver on its promises;
basically, Sun was very slow at delivering the goods. So, we
decided to shift our strategy to building thin-client and thin
servers based on Linux, and the NetWinder project was born and was
doing very well. Corel at that period had acquired WordPerfect.
There were many financial constraints, and Corel decided to spin
off their computer division. I left the company then in the early
summer of 1998. A few months later, that divesting happened and the
NetWinder was sold to Hardware Computing Canada, which later became
Rebel.com.

Margie: Right; so then you
started the new company?

Eid: No, after that I took a
break and did some consulting jobs in Montréal. Then, I joined a
start-up here in the U.S. early in '99. It turned out not to be the
right environment for me, so I left in June '99 and started
OE/ONE.

Margie: When Phil heard you
talk at UniForum in '98, you were talking about a fictional
character called Mr. Twenty O'One and what his life would be like.
I was wondering if your company name, the OE1, came from this
character?

Eid: Actually, it may! I
mean “one” sounded right, you know. It is only annoying now that
so many companies use it. We are thinking of a name change, and in
fact, we have a name in mind. If you are interested in the UniForum
talk, I can send it to you, it is in the UniForum 98 report. It was
in Linux--it was in the Linux Journal, August 1998! Yes, it was a vision. It was
basically an internal paper written for the company that I put on
our intranet. I modified it and twisted it into something that
would suit the UNIX crowd and also the computing crowd. My vision
is actually quite simple. Mr. Twenty O'One is an information
worker, a corporate person or a regular consumer who wants a
flawless flow of computing access to content and communication. So
he holds this hand-held device, I actually had a picture of the
device, okay? It looked a little bit like a Pilot—the Palm VII
didn't exist then—with a CDMA antenna and a little camera in it.
Basically, as he leaves home, a whole chain of events happens which
turn on how he deals with content and communication until he gets
to work, where he connects this device to his desktop or laptop
computer and downloads the information.

Margie: Are you trying to
make this scenario a reality for all of us with your new
company?

Eid: Yes, in fact, what I said at
the end of that speech was that all these technologies are
available today—only the integration is missing. The network
computing paradigm or Internet, it is the way to go as long as it
is served with an infrastructure like Linux, due to its robustness
and openness. This is why we merged the open-source Linux with
network computing in general.

Margie: Tell us about the
products you are building right now: the Web Appliance One and the
MMedia.

Eid: In effect, the company
is not building those products, we are only building working models
of those products which we will offer our customers. So the product
as described is in fact a software package, but a software package
that you don't see; that is, you will not see it shrink-wrapped on
the shelf. I call it OE1, which stands for operating environment, 1
being the number one. Actually, the 1 means two things. The
unification, which goes back to my speech at UniForum; and two, it
is the first, so there will be a second and a third.

Margie: Okay, so someone
else is going to be building the machines, and you sell them the
software to put on them?

Eid: That's right. We have
two target customers, but in fact they can be two in one. First are
the consumer electronics manufacturers, such as Sony, Panasonic,
Philips, RCA and the like. All this crowd, the multi-billion-dollar
companies, missed out totally on the PC platform, and they have not
yet benefited from the Internet era. Here is their opportunity. We
believe the market is ready for a machine that looks much more like
an appliance than a PC. These manufacturers could sell it like a
TV, but it has an advantage. Since it is a smart machine, an
Internet machine, they can secure revenues by establishing a link
between their customers who become members and themselves. We
believe those vendors deserve to own the customer relationship and
the branding, rather than somebody in the middle, like Microsoft,
Sun or Oracle. What we charge them for is the software license, the
software, professional services to customize it, upgrade and
maintenance costs.

Now the second category of customers are what I call FSPs,
the full-service providers. Those are the guys like AOL or
Earthlink, or they could also be those new emerging high-speed
providers, or network service providers, using such things as ADSL
or the cable modem. Let's talk about those in particular. Today,
when they compete in the marketplace, the only thing they compete
with is raw data, raw speed, and they aren't doing a very good job
at all. In fact, I myself have a cable modem at home, and the
provider wouldn't be able to convince me on speed, because the
performance is too variable and not always as smooth as a 56K
modem. So what I believe is those vendors do have a value add, but
the real value add is in providing a full complete service,
including a portal and serving applications and content. What
better way of doing it than by delivering a device that is a total
solution, rather than having to rely on an installation network to
install? That service cost me $150 and I had to do much of it over
because the proxy didn't work, it didn't work with Linux, I had to
go to a static IP, etc.—you know all these problems. With our
approach, the OEMs can merge the cable modem with the machine—we
do it for them—and they deliver a full machine for, say, $500. So
the customer pays that amount, or in fact, the vendor could
subsidize it in the service. For example, instead of charging
people $29, they charge them $39 a month, and it covers the cost of
the machine.

How do they make money? They up-sell. And the telcos, they do
this already. My telco charges me $5.00 a month just for voice mail
or Caller ID. Those are very simple applications, but I am still
willing to pay $5.00 a month for the convenience. When the OEMs
have this connection to their customers, they can then up-sell them
on many other applications. It could be a personalized finance
system; it could be just for possessing on-line; it could be for
extra content, because they have the bandwidth, multimedia content.
We want our platform to be thin enough that the OEM can build it
inexpensively, but high-end enough that it gives the same
experience as an iMac or a Windows 98-based Internet
machine.

Margie: Would they be able
to add the other software that normally comes on a PC, or wouldn't
they want to do that?

Eid: At the base level, you
get a first-grade browser, which is Netscape Communicator including
Java support, and the basic half-dozen non-standard contents, such
as a full PDF reader, a real networks client, real video/audio, an
MP3 player and even a Flash plug-in. I'm not sure yet if you'll
download it, or we'll integrate it. So that defines at this level
of delivering high-end contents.

Margie: When do you expect
to have the software ready and agreements made so that people can
actually go out and buy one of these machines?

Eid: Where we are at now is
we have a very strong prototype that I'm showing on a notebook and
machines at work. We are building half a dozen models. We'll have
the first two in a week or so. Those are working models with a neat
industrial design, and they are a true Linux platform running the
whole software. Most of the user interface for the laptop is pretty
much done. We are working on the Linux infrastructure to make it
robust and small and on the back end services, such as calendaring,
voice mail and the like.

We are targeting a first software cut about four months from
now. We worked first with OEMs, but have now completed the sales
and business team so that we are starting to work with ISPs to
bring everyone to the table.

Margie: Sounds like you are
making a good start. What about the MMedia?

Eid: The second appliance,
the MMedia, is the high-end one. It assumes the OEM will integrate
(which is what we are doing, actually) TV tuners and other media
inside the hardware—all integrated, perhaps, on the motherboard.
Our software will add the capabilities of what we call personalized
entertainment, such as TiVo and Replay. Thus, you can basically
flip through channels, record, play back, etc.—we want the machine
to look more like a TV, but a high-quality TV, a personalized TV.
That is the difference between the two platforms—basically
base-line and high-end multimedia.

Margie: There is a company
here in Seattle that is putting out an Internet appliance like the
one you are talking about. It looks like a thick book. On it
they've actually installed a stripped-down version of Microsoft
Windows NT, and I was wondering if y'all even considered doing
that?

Eid: Well, I've always said
I would love to use Windows if it had three elements in it. Number
one, if it was modular enough so that you could trim it down, which
I don't believe is feasible. Number two, if Microsoft would give us
and our customers full access to the source code, and number three,
if it was free!

Margie: Oh, right! I don't
think that will happen soon. This other company said they would be
selling the appliance for around $600. You are beating them on
price by about $100. Is that the cost of the operating
system?

Eid: Well, Microsoft could
decide to bring the price down to $50-$60 if they wanted. In my
business stand, this is one of the risk assessments: what if
tomorrow Microsoft decided to make a 90% cost cut on the price of
their OS? Then, it would be a threat, yes.

Margie: IDC has been
reporting that the information appliance market is going to grow
phenomenally in the next few years. I assume you believe this is
true. Why do you believe that?

Eid: Well, what I believe
is—let's not talk dollars, let's talk numbers—it is only a
natural trend. Today, 63% of people still don't have access to
computing or the Internet, so the market penetration has been
capped below 40% at about 37%. This is true for many reasons: cost,
maintenance, deployment, etc. People don't want to mess with the
complexities of a fully featured computer. So the 63% of people
without access now will be the target market for these appliances.
And these people will buy, since the Internet has become as much an
entertainment source as one for information. The numbers are
predicted to be at least two or three times bigger than the PC
market itself. That is not to say the PC market will shrink. By
IDC's report, it is still growing at about 9% yearly. I believe
that will be sustained for a while, because the momentum behind
Windows is tremendous. So, number-wise, we believe with IDC that
many more people will be accessing the Internet through these
alternative devices than through Windows or Macintosh
machines.

Margie: Do you think Linux
is going to dominate that market on these devices?

Eid: Linux has the best shot
at it. The reason is ubiquity. Many operating systems have claimed
the role to unseat Windows, and obviously, none of them could: not
the Mac, not OS2, BeOS or NextStep. Only one OS has a chance of
doing so—Linux, thanks to its open source. And also thanks to the
vote of confidence from the user base and Wall Street. That vote
has put enough momentum behind that operating system so that today,
you could spend hundreds of millions of dollars to improve it and
build applications that run on it.

Margie: It has been fairly
amazing.

Eid: Yeah! Don't you wish
you had been able to be a part of these IPOs? Many of our friends
and former employees work at VA Linux, and it has been good for
them.

Margie: I think it is good
to see these people, who have been so faithful to the Linux
community for so long, actually get something back in the form of
financial reward. People can't work for free forever.

Corel also obviously has faith in the viability of this
market, since they have acquired a 30% share of your company. Are
the machines going to come with Corel Linux pre-installed?

Eid: Absolutely. In fact, we
are still finalizing this. I've always said the deal with Corel was
not only financial—it was multifaceted; this is because it is a
great fit. Mike and I have never stopped seeing each other; we're
friends. However, we felt it best to wait until it made sense for
Corel and us to enter into a relationship before making a deal.
Basically, we are going to base our OS on Corel Linux and the
Debian distribution, because they made so many improvements to the
user interface, the browsing and other stuff. All of these
improvements are very, very useful. So the high-end aspects of our
device would have a Corel Linux in it and branded Corel Linux. We
don't know exactly how we are going to package it, but it is a
certain thing we are going to have Corel Linux in there. Also what
we have is access to source code of WordPerfect for Linux, but I
can't say much on what we are going to do with this. It is going to
be very exciting.

Margie: Sure. Which browser
are you planning to put in?

Eid: Mozilla, eventually.
For now, we are using Netscape 4.7 until Mozilla releases and we
can get on the bandwagon. We will be using all the Mozilla tools
and many web-top applications, such as calendaring, a desktop, a
file viewer and the like.

Margie: Do you think the
predictions you were making back in 1998 at UniForum will become
reality before 2001?

Eid: I picked 2001 for many
reasons, but the basic one is the wireless. And the wireless has
disappointed me in previous years, but now I'm very encouraged
after the last couple of shows I've attended. Basically, things are
coming together nicely to get the power consumption and the price
we were waiting for, so it's about to happen. What is not happening
yet is a basic digital PCS Personal Computing Services) that fits
in DMA that is low-power enough, inexpensive and serves better than
32 kilobits per second, so that the whole thing is feasible. By the
end of 2001, you'll see at least the first generation of those
devices. Palm VII goes in this direction, but not far
enough.

Margie:What do you now think
the future holds for Linux and OE/ONE?

Eid: For Linux,
consolidation in two or three major vendors who will dominate their
respective market segments. Broader application/hardware support
for Linux, which will make it a true alternative to Windows on the
desktop. Corel's work on the desktop and its rich set of
applications will greatly help the Linux cause.

I expect OE/ONE to lead the way in the consumer electronics
computing era. Our vision is to unify the way information, content
and traditional applications are accessed and enjoyed. Our
realistic goal is to eliminate the complexity from simple daily
computing tasks. Using an information appliance should be as easy
as turning on a TV and as fun as playing with a gaming console.
OE/ONE will achieve this with the help of our current and future
strategic partners.

Margie: Anything else you
would like to tell us about that I haven't asked you?

Eid: We always want to
remind people that we are, after all, a Linux company. So even
though the market we are addressing is a consumer market, we want
to hide the complexity of Linux as much as we can from the users.
But if it weren't for open source, and Netscape Communicator coming
to open source through Mozilla, you wouldn't see OE1 or companies
like OE1 around today.

Margie: Thanks for your
time. I am sure you will find success in your venture.

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